Multinational Or Global Corporations

The term multinational or global, corporation is used to describe a firm that operates in an integrated fashion in a number of countries. During the period since World war II, a new and fundamentally different form of international com-mercial activity has developed and this has greatly increased worldwide economic and political interdependence. Rather than merely buying resources from and selling goods in foreign nations, multinational firms now make direct investments in fully integrated operations from extraction of raw materials. Through the manufacturing process to distribution to consumers throughout the world. Today multinational corporate networks control a large and growing share of the world’s technological, marketing and productive resources.

Companies, both U.S. and foreign. go global for six primary reasons:

1. To seek new markets. After a company has saturated its home market, growth opportunities are often better in foreign markets. Thus, such homegrown firms as Coca-Cola and Mcdonald’s are aggressively expanding into overseas markets and foreign firms such as Sony and  Toshiba now dominate the U.S. consumer electronics market.

2. To seek raw materials. Many U.S. oil companies such as Exxon, have major subsidiaries around the world to ensure access to the basic resources needed to sutain the companies primary business line.

3. To seek new technology. No single nation holds a commanding advantage in all technologies so companies are scouring the globe for leading scientific and design ideas. For example, Xerox has introduced more than 80 different office copiers in the United States that were engineered and built by its Japanese joint venture, Fuji Xerox. Similarly, versions of the super concentrated detergent that Procter & Gamble first formulated in Japan in response to a rival’s product are now being marketed under the Ariel name in Europe and under the Cheer and Tide labels in the United States.